TSP help

[Anonymous]

My spouse just retired from Fed Gov and wants to pull the TSP out and put it in the bank to use. are we going to get taxed to death, it is only about 260K

[Anonymous]

This sounds like a pretty terrible idea. How old is your husband? What is ya’lls retirement plan? Yes, he will pay ordinary income taxes and possibly a penalty depending on his age. Why does he want to withdraw it?

[Anonymous]

If he wants to pull it out and pay all the taxes, better to move it to a Roth, where it can continue to grow tax free after you've taken the tax hit. He can invest in a money market if he wants bank like, but tax free, returns.

[Anonymous]

Pretty wild. What’s his logic?

[Anonymous]

That's a waste of money. How old is he? Do you realize the tax bracket it will bump those last dollars into?
If he is 56+ why not take it out gradually?
TSP did very well for me over the years, about as well as my Vanguard mix.

[Anonymous]

He can put all his money into the G Fund if he just wants regular interest without investing, and then make withdrawals as necessary and pay taxes on what he withdrew each year.

[Anonymous]

Anonymous wrote:My spouse just retired from Fed Gov and wants to pull the TSP out and put it in the bank to use. are we going to get taxed to death, it is only about 260K

The second half of your post explaining why is missing.

[Anonymous]

How much do you spend a year? Are you still working? Only take out what you need and let the rest grow.

[Anonymous]

Pulling it would mean those 260k would get taxed in one year. Thats a fairly high tax bracket. You’ll get taxed approx 25% of all of it

[Anonymous]

Madness

[Anonymous]

Anonymous wrote:My spouse just retired from Fed Gov and wants to pull the TSP out and put it in the bank to use. are we going to get taxed to death, it is only about 260K

Pull out or rollover? Sounds crazy.

[Anonymous]

There's some missing info here. You could transfer the TSP to your traditional IRA held at your bank and there'd be no taxes due. But you'll be taxed once you start withdrawing from your IRA.

[Anonymous]

This sounds like a really bad idea. If they are insisting, they you should insist on seeing a financial planner of some sort (preferably one who specializes in federal government employees) and they will talk some sense into your spouse.